What this lesson teaches
I can judge which factors, at home and abroad, did most to shape economic change in Southeast Asia.
Syllabus 9174, Paper 2, Theme II, Learning Outcomes. evaluate the factors shaping economic change in different contexts and over time
Make a guess
Chinese family groups such as the Salim Group grew into huge conglomerates. Do you think they succeeded independently of governments?
- No, governments owned and ran these conglomerates.
- Yes, they did not need help from governments.
- No, many prospered through close ties to rulers.
Show the answer
No, many prospered through close ties to rulers.
The Salim Group won valuable licences through links to Suharto. Business success often depended on government favour.
Local family firms, especially Chinese-owned groups, and foreign multinationals drove much of the growth. Their success often depended on links with governments.
Chinese family businesses were central across the region. Groups such as Charoen Pokphand in Thailand, the Salim Group in Indonesia and Robert Kuok's companies in Malaysia grew into large conglomerates.
Many prospered through close ties to rulers. Liem Sioe Liong's Salim Group won valuable licences through its ties to Suharto, such as the right to mill most of Indonesia's flour.
Multinational companies brought capital, technology and access to world markets. American, Japanese and European electronics firms built factories in Singapore, Penang and Thailand.
Governments also created new business classes. Malaysia's NEP helped build a Malay business class through state contracts, licences and share allocations.
Private businesses could also do harm. Cronies in the Philippines ran industries badly, and heavy borrowing by private firms in Thailand and Indonesia helped cause the 1997 crisis.
- Charoen Pokphand
- Thailand.
- Salim Group
- Indonesia; ties to Suharto.
- Multinationals
- Electronics in Singapore, Penang and Thailand.
Real examples to use
Intel in Penang, 1972
Intel opened its first factory outside the USA in Penang's Bayan Lepas free trade zone in 1972, with about 100 workers and a 1.6 million dollar investment.
Salim Group, Indonesia
Founded by Liem Sioe Liong, a friend of Suharto, it grew from flour milling into banking, cement and noodles because of state licences.
Malaysia's NEP target, 1971
The New Economic Policy aimed for Malays and other Bumiputera to own 30 per cent of company shares by 1990, up from a low single-digit share in 1970. By 1990 they owned only in the high teens.
Worked example: Weighing private business
How important were private businesses?
- Drivers: conglomerates and multinationals created jobs and exports.
- Dependence: many relied on government favour.
- Risk: cronyism and reckless borrowing.
- Judgement: important, but shaped by government.
Watch out for this
Private businesses succeeded independently of governments.
Many of the largest firms grew through licences, monopolies and contracts from governments. Business success and political connections were closely linked.
Check your understanding
How did the Salim Group prosper in Indonesia?
- Through close ties to Suharto that brought licences and monopolies
- By exporting rice to Burma
- By refusing to work with the government and relying on exports
Show the answer
Through close ties to Suharto that brought licences and monopolies
Right. Political links shaped business success.